Wasted Talent
“The saddest thing in life is wasted talent.”
Lorenzo Anello (Played by Robert De Niro from the film A Bronx Tale)
If I were to tell you in 1975, 1985, 1995, or 2005 that in 2016 the United States of America would be an energy powerhouse exporting oil and natural gas around the globe. That in 2016 medical advances would be extending lives exponentially and we would be getting ever closer to major breakthroughs in cancer and Alzheimer. Also, in 2016 global poverty would be at its lowest level in history. Taking just these few facts into consideration one would likely assume that the United States economy would be booming. Unfortunately, by nearly all metrics, we are not.
The unemployment rate looks halfway decent at a quick glance, sitting at 5%. However it is misleading, disguising an abysmal labor participation rate of 62.9, which happens to be the lowest reading since March of 1978.
More than six years after the end of the last recession, 93% of counties in the United States have failed to fully recover. The four indicators being used in this study by the National Association of Counties were: total employment, the unemployment rate, size of the economy and home values.
The percentage of Americans that are living below the poverty line is 14.8%, which is an increase of 3.5% since the so-called recovery.
Real median household income since the inception of the recovery is down 2.3 % from $54,925 to $53,654. This has led to the bleak balance sheets of many Americans. In a survey by Bankrate.com approximately 63% of Americans have no emergency savings. This survey coincides with a report put out by the U.S. Federal Reserve, which found that savings have been depleted by 57% of Americans.
Food Stamp participation has skyrocketed. It is pretty ironic that since the end of the recession enrollment has actually gone up a staggering 39.5% to over 45 million participants.
Home ownership has dipped 5.2% to 63.8%
The United States has officially gone a record straight ten years without 3% growth in real Gross Domestic Product. The Bureau of Economic Analysis has calculated the inflation adjusted annual change in GDP from 1930 forward. In those 85 years, only the ten-year span of 2006-2015 never saw growth of 3%. The best year, being 2006 at 2.7%.
America’s youth, the so-called Millennials are not optimistic about the future. According to a nationwide survey by Harvard University’s Institute of Politics nearly half of those ages 18 through 29 believe the “American Dream” is more dead than alive.
According to Gallup, 75% of Americans in 2015 perceived corruption as widespread in the country’s government.
Businesses are dying in the Unites States at a frightening rate. The CEO of Gallup Jim Clifton remarked on the horrific trend in the death of American business, “For the first time in 35 years, American business deaths now outnumber business births. Business startups outpaced business failures by 100,000 per year until 2008. But in the past six years, that number suddenly reversed, and the net number of US startups versus closures is minus 70,000. Entrepreneurship is now in decline for the first time since the U.S. government started measuring it. Small and medium sized businesses are dying faster than they’re being born. So is free enterprise. And when free enterprise dies, America dies with it. ”
One of the saddest things about our country’s current discontent is how obvious it is to why we are where we are. All of these statistics have been the precursor to the general feeling of malaise that has taken root in the country. Many Americans are beginning to feel that the American dream is dead, or has been taken from them. Without a doubt, the middle class in America has been hollowing out. A report from the Pew Research Center demonstrates that economic inequality is increasing. They have found that the middle class is dissipating. More Americans find themselves in either the upper or lower income households.
We believe there is an inverse relationship between the size of government and a countries growth prospects. The smaller the size of government, there is the greater opportunity for a dynamic economy, vibrant growth and upward mobility. The larger a government becomes is like taking trip down Hayek’s Road To Serfdom or ACDC’s Highway to Hell. They both end up at the same destination.
We are sending more and more of our money to Washington D.C. to have our lives run by out-of touch establishment elites. The scene is eerily reminiscent of Capital City in the literary and film series The Hunger Games. Washington D.C. has become one of our nation’s wealthiest areas. However, it is not a place where products are designed and manufactured, it is a place where insiders cut deals, rules are made, taxes are collected and the American worker and entrepreneur is royally screwed.
“You are, what your record says you are.”
Bill Parcells
Remember the year 2000? The computer bug was going to crash the world’s computers. Jennifer Lopez was dancing around half-naked. The Derek Jeter led Yankees beat the Mets in the first subway series. The United States was ranked second in the world in economic freedom. Fast forward to 2016. Computers are in everyone’s fingertips and are used to take stupid a picture of oneself making a face like a fish. Jennifer Lopez is still dancing around half-naked and arguably looking even better. The Derek Jeter-less Yankees lost to the Astros in the wildcard. Last, and most certainly least, the United States has plummeted to 16th in the world in economic competitiveness.
The United States was once looked upon as the “land of opportunity.” We can no longer use that tagline, it would be false advertising. The Economist has compiled some extraordinary statistics…
American companies are showing record profits in relation to GDP. What is disturbing is the persistence. A very profitable American company has an 80% chance of being that way ten years later. In the 1990’s the odds were about 50%. It is easy for incumbents to stick around. High profits one might associate with reinvestment or shareholder spending is not happening. The excess profits earned by American companies are running $800 billion a year, which is 4% of GDP. This has resulted in low-wage growth and higher prices. If profits were to sit at historically normal levels consumer’s bills would be 2% lower. The high profits that would normally bring competition to an industry is not occurring, leading one to believe that companies are utilizing their lobbyists and abusing their monopoly positions. The game is rigged.
Microsoft is making double the profits it did when the antitrust regulators went after it in 2000. The Economist’s analysis of census data suggests that two-thirds of the economy’s 900 industries have become more concentrated since 1997. Ten percent of the economy is controlled more-or-less by a few firms. Adding insult to injury, there have been $10 trillion in mergers since 2008 furthering concentration.
The worldwide recognized report, Fraser Institute’s annual report, Economic Freedom of the World, showed that we have continued to decline in several areas that include, legal rights, property rights and regulation. “The United States, once considered a bastion of economic freedom now ranks 16th in the world after being as high as second in 2000.” You will be proud to know that the former Soviet satellite state of Georgia is ranked higher than us, along with Chile, Ireland and even Taiwan. The Summer Olympics in Brazil is around the corner and I guarantee that if we come back 16th in the medal count, there would be monumental outrage. I have no doubt it would be the top story EVERYWHERE! It’s sad that a much more important benchmark, something that really matters and affects the lives of all Americans gets reported solely by guys like me. Regulations have gotten completely out of hand in a way that stifles competition and in essence builds a wall with a moat around established firms. The big companies can lobby there way out of rules or drive holes through them that benefit them and them only. Lobbying spending has risen by a third in the past decade which now stands at $3 billion.
If you thought number 16 was bad…The Tax Foundation released its annual International Tax Competitiveness Index and we are ranked a horrific 32 out of 34 industrialized nations. 74,000 plus pages of crap is what the taxpayers of the United States have to deal with. The index measures factors that include how friendly a government is to business and investment, including the amount of taxation and how complex the rules are. We are dead last in the 34 Organization For Economic Cooperation and Development nations when it comes to taxing corporations.
The business of Washington D.C. is red tape, and business is booming. In 2015 the Obama administration broke their own record by issuing 82,036 pages of new rules and regulations in the Federal Register. The Obama administration owns six of the seven most egregious years of regulating in the history of our country. The Wall Street Journal notes, “Mr. Obama’s dominance is issuing new diktats from Washington is not limited to formal rule-making, in which the public has a chance to review and comment on proposals before they are enacted. His administration is also in a class by itself in issuing de facto rules as notices or guidance that are ignored by businesses at their peril. Many of these ukases from Washington never even make it into the Federal Register, so Mr. Obama’s record-breaking official totals understate the depth and breadth of his regulating.”
Our current situation is not without precedent. If one looks to the history of ancient Rome, the parallels are striking. Rome like the United States was conceived as a stand against a monarchy. Both nations were very suspicious of concentrated power and authority. The United States and Rome established republics that enshrined checks and balances, separation of powers and the protection of the individual with certain rights held sacrosanct. This is the recipe for success. The greatest advances in individual liberty led to prosperity without precedent in world history. The history of classical Rome lasted one thousand years. The first half was a republic; the second was an imperial autocracy. The conditions, events and how they transformed from one to the other is frighteningly familiar.
Lawrence Reed from the Foundation of Economic Education has a succinct analysis of what happened to Rome. He calls it “The Three Most Stubborn Lessons of History.”
- No people who lost their character kept their liberties
- Power that is shackled and dispersed is preferable to power that is unrestrained and centralized.
- The here-and-now is rarely as important as tomorrow.
Reed explains that character embodies the trait of virtue. In Latin the word is virtus meaning courageous honesty. This trait was the end all be all of early Roman society. Other traits of character that were stressed in early Rome were: gravitas (dignity), benevolentia (goodwill), pietas (loyalty and a sense of duty), and simplicitas (candor).
“The connection between character and liberty is powerful. Liberty, by which I mean rule of law, respect for and protection of the lives, rights, property and contracts of others is the only social arrangement that requires character. No other system, especially socialism asks much of you other than to keep quiet, pay your taxes and go get yourself killed when the State so directs. The absence of character produces chaos and tyranny. It’s presence makes liberty possible. Rome rose from nothing and sustained itself as a great entity for centuries because of its strong character.”
Rome transformed from republic to an empire through the process of erosion. The welfare state that was instituted little by little by individuals craving power ate away at the virtus of the Roman people. Slowly but surely a self-reliant people abandoned responsibility, discipline, and property rights. They turned to the government to solve their problems. What is in it for me? What am I entitled too? These question asked today by vast numbers of Americans are nothing more than echoes of the past. The politics of Rome is also a familiar tune. There were incredible sums of money spent to get one elected, with taxes being raised in the aftermath to pay for all the grandiose promises made to the self-centered populace. The emperors of Rome built their power on entitlements the same way our politicians do today.
Rome when founded understood that concentrated power was very dangerous. They originally split the top position of power between two individuals called consuls. The one was a check upon the other and neither could serve more than one year. The legislature was composed of the Senate and assemblies of elected representatives. Sound at all familiar? Reed explains that these checks and balances dissipated over time because the cities and provinces of Rome lost their power and independence to the central government after demanding money to get them out of difficult situations. The Roman historian, Tacitus wrote that freedom was undermined when the focus of Roman legislation changed from the security and good of all to the satisfaction of particular individuals and interest groups. “And now bills were passed not only for national objects but for individual cases, and laws were most numerous when the commonwealth was most corrupt.” Rome also decided that they too needed to be Policeman for the world going from one quagmire to another. Wars are not cheap as we are well aware. Add those costs to an ever-expanding welfare state and you get a big fat bill with not enough people to tax to pay it back.
The early Romans also understood the need and importance to plan for the future. The concept of delayed gratification was understood and was ever-present in their lives. Rome drifted, as we have drifted to a point where all that matters is the here and now. Don’t worry about the cost or future ramifications of your choice, somebody else will pay the bill or clean up the mess later on.
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It is one thing to know what is wrong; it is another to fix the problem. For example, Bernie Sanders supporters are correct on many of their assessments of what is wrong with our country; their remedy of bigger government will do nothing but exacerbate the evils. Here are a few things that would get our nation back on track…
- Simplify the Tax Code. No more loopholes, handouts and give-a-ways.
- Balance Budget Amendment. Pretty straightforward, DON’T SPEND MORE THAN YOU ARE TAKING IN!
- Reform the Regulatory Process. No more “judge, jury and executioner” from the various acronym agencies from the Executive branch. Legislating should come from Congress. Simplicity is the key; less is more when it comes to rule making. We need to make the United States “user-friendly”
- Term-Limits. Not just termed out of office, termed out of Washington. An individual should not be allowed to work anymore than eight years in total as an elected official. It should be forbidden to work in any capacity as lobbyist after serving in public office.
- Break Up Monopolies. Especially for banking and media, we need to allow small-businesses to thrive once again.
- Establish a Non-Interventionist Foreign Policy Doctrine. We have been in nearly perpetual war for a century, time for that to stop.
- Free Trade Only When The Playing Field Is Level. How can you have a free trade agreement with a country that still has indentured servants (slaves)?
- Immigration Reform. We want people that want to be Americans. We are doing a horrendous job of assimilating people to our society; we are witnessing the balkanization of America. To quote Michael Savage, “Borders, language, culture.”
- No More Subsidies. I am tired of paying for other peoples Tesla’s. The government should be forbidden from diverting taxpayer money to any private concern. It is not the duty of government to pick and choose winners and losers. No special tax deal should be given to any private concern on the federal or local level. Everyone should be, as our Declaration of Independence espouses, be “equal” under the law.
- Entitlement Reform. This is just basic algebra. The Social Security System and many pensions are unsustainable. We need to rethink the entire concept of retirement and what it means to generations of people that will be living much longer and healthier lives.
- Welfare Reform. Welfare is our nations number one “drug” problem. We have too many people that have become addicted to this way of life and we need to break the cycle. The Great Society programs by every metric have been a failure. Children at risk of becoming a part of this cycle need to be attending institutions that provide them what they are not getting in the home. For example: virtus, gravitas, benevolentia, pietas and simplicitas.
- Get Out Of Health Care, Housing and College Education. As soon as the government gets involved the costs go up. Bring the open and free market to these industries and their products and services will be priced according to what the market will bear.
We have all this talent and potential and yet we are letting it slip away. The twelve items I cite are by no stretch a difficult thing to get done if we put our mind to it. The American people are an angry lot, not an optimistic one and that is a tragedy. Small business creation in America is running at its lowest levels since the 1970’s. All new jobs in the United States over the past thirty years have come from firms five years old and younger. The dynamic rugged individualistic nature of our once great economic agent has gone missing and we need to get it back. We lost our mojo. We have the talent and ability it’s now time to stop wasting it.
Editors The Ugly Truth About Obama’s Pretty Darn Great Economy New York Post 3/13/16
Editors Six Years Later, 93% of U.S Counties Haven’t Recovered From Recession, Study Finds Wall Street Journal 1/14/16
Editors Most Americans Are One Paycheck Away From The Street MarketWatch 1/6/16
Editors U.S. Has Record 10th Straight Year Without % Growth in GDP CNS News 2/29/16
Samuelson Robert The Hollowing Of The Middle Class Washington Post 1/4/16
Editors Nearly Half of Youth Say American Dream Is Dead: Harvard Poll Bloomberg 12/13/15
Editors 75% in U.S. See Widespread Government Corruption Gallup 9/21/15
Bedard Paul U.S. Drops To 16th On Economic Freedom List, Behind Canada, Chile Washington Examiner 9/14/15
Editors American Tax Exceptionalism Wall Street Journal 9/28/15
Editors Happy New Regulatory Year Wall Street Journal 1/3/16
Reed Lawrence How To Lose A Constitution Lessons From Roman History Foundation For Economic Education 4/13/16
Editors The Problem With Profits The Economist 4/26/16
